ALL: Global Composite PMI

February 3, 2017 10:00 CST

Actual Previous
Level 53.9 53.4

The January global composite PMI posted a reading of 53.9,up from 53.6 in December and its best since March 2015. The index has now signaled expansion for 52 consecutive months. Growth of global service sector business activity improved to a 17-month high offsetting a minor easing in the rate of expansion of manufacturing production.

By nation, the acceleration in the rate of increase in all-industry output was led by the US and Russia. US growth was the sharpest since November 2015, while Russia registered its quickest expansion of economic activity for over eight-and-a-half years. The euro area saw output growth steady at December's 67-month record, while rates of increase slowed in Japan and the UK. India and Brazil both saw all-industry activity decline at the start of 2017.

Global employment rose again in January, with the pace of job creation matching December's 19-month record. Staffing levels increased in the US, the Eurozone, Japan, the UK, Russia and India, but fell further in Brazil.

Cost inflationary pressures continued to build in January. Steeper input price rises were seen at both manufacturers and service providers, although the rate of increase was far more severe in the manufacturing sector. Meanwhile, average output charges rose for the eleventh straight month, albeit to a lesser extent than in December.

JP Morgan Global Composite PMI gives an overview of the global manufacturing and services sectors. It is based on monthly surveys of over 16,00 purchasing executives from 32 of the world's top economies, including the U.S., Japan, Germany, France and China which together account for over 85 percent of global GDP. It reflects changes in global output, employment, new business, backlogs and prices. The Global Composite PMI is seasonally adjusted at the national level to control for varying seasonal patterns in each country and is produced by J.P. Morgan and Markit in association with ISM and the International Federation of Purchasing and supply Management (IFPSM).

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. The J.P. Morgan Global Manufacturing PMI provides advance insight into the global manufacturing and services sectors, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of global markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The J.P. Morgan Global Composite PMI data give a detailed look at the manufacturing and services sectors, how busy it is and where things are headed. Since data are pooled from many countries which represent the lion's share of global manufacturing and services output, this indicator provides an advance look at the global private sector economy. Its sub-indexes provide a picture of global output, new orders, prices, employment and backlogs.